I have spent 20 years working in nonprofit think tanks, the last 13 as a resident scholar with the Institute for Policy Innovation in Dallas. I also ran the Washington, D.C.-based Council for Affordable Health Insurance for nearly nine years. While I cover a range of political, economic and policy areas, I specialize in health policy. Prior to joining the think tanks, I taught philosophy. I received all three of my degrees—BBA in economics, masters in divinity and Ph.D. in humanities—from Texas universities. I was an ethicist for a medical school's panel reviewing human experimentation. I'm a member of the U.S. Commission on Civil Rights Texas Advisory Committee. For several years I was a political analyst for the USA Radio Network, and I hold a 6th degree black belt in Tae Kwon Do and still teach.

Obama's Wrong; The Economy Is Improving Because Of Congressional Deadlock

President Obama says the recent jobs report shows the economy is recovering; but it would be doing even better, he asserts, if Republicans would end the deadlock and pass his tax-increasing, big-spending agenda. To the contrary, a stronger case can be made that the economy is improving precisely because Obama and Congress are deadlocked.

Let’s start with Obama’s pejorative accusation that this is a do-nothing Congress, which he uses to justify circumventing the legislative branch.

According to the House of Representatives’ Office of the Clerk, 125 public bills were enacted into law in 2009, Obama’s first year in office, and 258 in 2010, including Obamacare.

Barack Obama’s 5th State of the Union (Photo credit: DonkeyHotey)

But Republicans took over the House in 2011, after a massive voter pushback against the president, Obamacare and the Democratic agenda. As a result, only 90 public bills were enacted in 2011. That number climbed to 193 in 2012—a presidential election year, which usually means both parties are trying to placate voters—but fell to 73 in 2013, and 35 so far this year (with not much time left).

The Clerk’s office only quantifies the enacted bills without assessing their importance, but the number of enacted bills has declined. However, as enacted bills declined the economy improved.

While correlation is not causation, a case can be made that the economy is doing better because Congress is doing less.

Take a look at the unemployment rate. According to the Bureau of Labor Statistics it was 7.8 percent in January 2009 when Obama took office. It climbed to 9.7 percent in January 2010, an increase of 1.9 percentage points—even though Obama’s economic team promised their major spending bills, like his stimulus package, would keep unemployment below 8 percent.

By January 2011 unemployment was down to 9.1 percent. A year later in 2012 it was 8.2 percent, 7.9 percent in January 2013, 6.6 percent in January of this year, and 6.1 percent now. In other words, the biggest decline in unemployment came at the same time that the president ramped up criticism of the do-nothing Congress. And given that this year Congress is on track to be one of the least productive in history, it will be interesting to see if unemployment drops even more.

Or let’s look at the stock market. In 2013 the Dow went up 26.5 percent, the S&P 500 was up 29.6 percent and the Nasdaq was up a whopping 38.3 percent. The Dow was up only 5.5 percent in 2011 and 7.2 percent in 2012.

The stock market usually takes off right after a recession’s end, which in this case was July 2009. So why did it only start gaining momentum years after the end of the recession? No doubt the Federal Reserve Bank’s easy money policy has played a role, but the market exploded only after it became clear the budget sequester cuts would actually take effect in March 2013.

You remember the budget sequester. That was Obama’s budget-cut proposal—though the White House denied it until Washington Post reporter Bob WoodwardWoodward called them out on it—which he never thought would be implemented. As the March 2013 deadline drew near, Obama and his economic team tried to scare the country by claiming the sequester’s forced budget cuts would destroy the economy. The economy actually improved and the stock market zoomed—even as Congress and the president deadlocked.

A third measure is economic uncertainty, which dampens businesses’ willingness to invest and grow. When businesses do not know whether or when the government will increase taxes, regulations, wages and mandates—such as requiring companies to provide benefit-rich health insurance—and by how much, many will sit on their cash rather than invest it in new equipment and employees. That reluctance to invest and expand because of uncertainty surrounding Obama’s policies has made this one of the slowest economic recoveries in U.S. history.

According to the St. Louis Federal Reserve Bank’s Economic Policy Uncertainty Index, economic uncertainty was abnormally high for most of Obama’s early years—when he could get the Democratically controlled Congress to pass most of what he wanted.

But uncertainty began a gradual decline, especially after mid-March 2013 when the sequester cuts kicked in. Uncertainty increased significantly during the government shutdown last fall, but has been on a steady decline since.

And the reason for the uncertainty decline seems clear: Businesses are fairly confident that the Republican-led House will put a check on Obama’s goal of increasing taxes, spending and regulations. Thus, instead of stifling business investment, the current deadlock is facilitating it.

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Abundantly obvious. the whole idea of Governing is to require people to do what they otherwise would not, and to take and spend their money. Only a rich society growing at least as fast as it’s Governing activities are collectively can if it’s willing to afford an expanding set of Governing activities. Others can not, and what happens in such cases is as Governing increases, economic growth decreases.

Since Mr Matthews explains economic issues so well, perhaps it would be timely to present the current environment in regards to the US dollar’s diminishing status as the world currency reserve. Thanks in advance.

With that thinking why not say the economy is getting better because Obamacare has been implemented? Since Obamacare has been implemented things are getting better faster. The Republicans have been saying Obamacare would have a HUGE impact on the economy and jobs. There you go, the same airtight logic as the article.

The truth is the economy reversed itself from getting worse every month to getting better every month once the stimulus was passed in 2009. From then on it has been getting better and at a faster pace. Who knows how much faster it could have improved if we continued on that proven recovery path?

Um, Alex, you do know that Obamacare didn’t officially start until January, don’t you? And that people were still signing until April. It would be a little hard to claim the increase from the last few years was due to something that started a few months ago. But you’re in “bad” company, the White House was claiming exactly that a year before the legislation kicked in.

Um Merrill, you do realize that I’m simply using the logic you established don’t you?

“A year later in 2012 it was 8.2 percent, 7.9 percent in January 2013, 6.6 percent in January of this year, and 6.1 percent now. In other words, the biggest decline in unemployment came at the same time that the president ramped up criticism of the do-nothing Congress. And given that this year Congress is on track to be one of the least productive in history, it will be interesting to see if unemployment drops even more.”

By that same logic the biggest decline came when Obamacare was implemented. It will be interesting to see if unemployment drops even more considering the Republican claims that Obamacare would have a huge impact on the economy.

You said it best already: “While correlation is not causation…”

Also, you have not addressed why the economy trended from getting worse faster as time progressed to getting better faster as time progressed after the stimulus package was signed into law.

The economy historically always gets better after a recession or depression; the only question is how fast and how long. The current recovery has been the slowest since the great depression. And I have argued here at Forbes that there is a reason for that: Obama and FDR embraced many of the same policies.

The two biggest economic recessions in the US before the 2007-2009 recession were the Great Depression and the 1981-1982 recession. Both only recovered after MASSIVE government spending. Reagan almost tripled the debt to get out of that recession.

Obama was able to get the stimulus package passed and that stopped the accelerating decline immediately then started rebound after that. History shows if he could have spent like Reagan did we would have recovered faster.

But maybe a slower recovery is a more lasting one.

One thing is for sure there is no evidence that shutting down the government helped improve the economy.

I do not enjoy that a so called “do-nothing House” is viewed as unproductive. A Taoist could easily conclude by doing nothing, they are doing more than they could if they were “actually doing something”. This article makes the case for the effectiveness of checks and balances, something we learned, in elementary school, which is critical to political structure.